Tilray Stock Flounders in 2019
If there has been one singular disappointment in what otherwise has been a fantastic year for pot stocks, it’s Tilray Inc (NASDAQ:TLRY).
The former marijuana stock darling has plummeted since its initial public offering (IPO), falling from a high of $300.00 to its current price of just over $50.00. That’s a huge decline for investors who bought in high.
And it’s made all the more jarring considering how profitable many other pot investments have been.
See the chart below for just how poorly Tilray stock has fared in comparison to its rival, Canopy Growth Corp (NYSE:CGC).
Chart courtesy of StockCharts.com
The diverging fortunes of these two companies shows just how weak TLRY stock has been compared to its onetime direct competitors.
Remember that it wasn’t long ago that Tilray sought to challenge Canopy Growth for the top spot in the marijuana industry, overtaking it in market cap for a brief period.
But those days are long in the past. Now the company must find a way to stem the slow bleed that has taken place ever since its stellar run when it first hit the markets.
Unfortunately, there hasn’t been much good news to serve as a bandage.
The company’s last quarterly report did little to help turn things around for the company.
Revenue for fiscal 2018 increased to $43.1 million, up 110% compared to the previous year. That is a strong increase, mainly motivated by the legalized Canadian pot market. The company also doubled its number of kilograms sold, also a result of the opening of the Canadian legal marijuana market. (Source: “Tilray, Inc. Reports Full Year 2018 Financial Results,” Tilray Inc, March 18, 2019.)
Net loss for the year, however, was $67.7 million ($0.82 per share), compared to $7.8 million ($0.10 per share) for 2017.
The loss was caused by increased operating and expansion costs, as well as the cost of funding its IPO on the Nasdaq (the first of its kind for marijuana stocks). Whatever the reasons, however, investors were none too pleased to see such a high net loss.
CEO and President Brendan Kennedy said the following:
2018 was a very successful year for Tilray with many corporate milestones. Our team made significant progress on our long-term initiatives including increasing production capacity, expanding and strengthening strategic partnerships, and acquiring complementary businesses to accelerate our future growth and leadership position in medical and adult-use cannabis.
The overall takeaway from the last earnings report was that the company showed a strong revenue increase (in keeping with the marijuana industry as a whole, post-legalization) but the heavy losses stopped any sort of stock rally dead in its tracks.
Not to mention that Tilray’s revenue increases were rather small compared to the massive jump we saw from some companies, like OrganiGram Holdings Inc (OTCMKTS:OGRMF, CVE:OGI).
And I’m not the only one who thinks that the way ahead for Tilray looks rocky.
Just a few weeks ago, CastleMoore Investment Counselling Portfolio Manager Hap Sneddon had a similarly bleak proclamation for Tilray.
“This whole area is a real quandary for me because there are so many variables. Tilray is such a new issue. It got to $300, but I see no support until we hit around $35 for Tilray,” said Sneddon. “I think you could see $34. We’re right around $48 but there’s nothing to hold it there anymore and I don’t see any catalysts in the sector.” (Source: “Tilray is in trouble, this fund manager says,” Cantech Letter, April 15, 2019.)
There’s been no major partnership to help bolster stock value, nor a strong acquisition or expansion to renew interest in Tilray stock.
And that brings us to the one thing that could turn it around for TLRY stock in May.
TLRY Stock Q1 2019
While the last quarterly report did little to help turn things around for the company, there’s renewed hope that perhaps Tilray Q1 2019 will be able to set things right.
Here’s where we have to play a bit of a guessing game.
While the previous quarterly report came in short of expectations and did little to aid TLRY stock, that may have been a blessing.
It could have been just what Tilray has always needed: lowered expectations.
Coming out of the gate with 1,000% gains post-IPO set the bar far too high for the company. These lofty expectations have been difficult for Tilray to live up to and we’ve seen the company suffer as a result.
With TLRY stock having had such a weak year so far, investors are rightfully down on Tilray, which means that an otherwise mediocre quarterly report could outdo expectations and send shares on an upward swing.
It’s hard to guess at just how well Tilray stock will do when the company’s next earnings report is released on May 14, but there’s a decent chance that quick gains can be made from the stock in the near future.
Tilray Stock Prediction
While there is still potential in Tilray, I don’t see why investors need to play on potential when there are so many better options in the market that are delivering results right now.
The company’s upcoming quarterly report could help turn things around for Tilray, but I expect that any stock gains made will, ultimately, be short-lived unless the company can follow it up with a major acquisition or some other big play to keep investor sentiment bullish.
I could see Tilray stock dropping to $40.00 in 2019 unless it is able to start netting some serious and sustainable wins.
There is hope yet in TLRY stock, but unless you’re a day trader looking for quick cash, there are far safer investments elsewhere in the marijuana market.
Tilray Inc has a herculean task ahead of it.
The company has fallen significantly behind many of its competitors and has a lot of catching up to do.
Tilray stock may again see gains—sooner rather than later if the company’s next financial report blows our minds—but that’s a risk that, in the current bullish market, is unnecessary for long-term buy-and-hold investors.